Business growthBusiness growthMaryam, Noor, Abrar, Aisha.

G10

HorizontalHorizontal

When one firm merges with or takes over another one in the same industry at the same stage of production

Horizontal ExampleHorizontal Example

Corus accepted a take-over bid for 7.6 billion from Tata Steel. They are both from the same industry and work in the same stage of production.

Benefits of HorizontalBenefits of Horizontal

Reduces the number of competitors in the industry.

Opportunities for economic scales

Combined business will have a bigger share of the total market than either firm before the integration

Vertical Vertical

When one firm merges with or takes over another on in the same industry but at a different stage of production

Vertical ExampleVertical ExampleOne example of a vertical integration is the Carnegie Steel company. There is a backward integration, because the company controls the mills where the steel was made and merges with the mines where the iron ore is extracted.

Vertical BenefitsVertical Benefits

The merger gives an assured supply of important components.

The profit margin of the supplier is absorbed by the expanded business

The supplier could be prevented from supplying other manufacturers

The cost of components and supplies for the manufacturers be controlled

ConglomerateConglomerateThere are two main types of conglomerate mergers the pure one;

When one firm merges with or takes over a firm in a completely different industry.

The other one is mixed conglomerate merger are ones when the companies that are merging with each other are doing so with the main purpose of gaining access to a wider client base.

Conglomerate Conglomerate ExampleExample

An example would be when a clothing company like aeropostale joining a company that sells jewelry like KAY JEWELERS.

Conglomerate Conglomerate Benefits&LimitationsBenefits&Limitations

Assist the companies to diversity.

Conglomerate mergers the merger companies can also bring down the levels of their exposure.